Propane to power island grid

Propane is on its way to the Virgin Islands to generate electrical power.

Under a pact signed in July between the Virgin Islands Water and Power Authority (WAPA) and the Vitol Group, Vitol will be paid about $86 million over seven years to build storage terminal facilities at both the St. Thomas and St. Croix plants and upgrade eight existing turbines for propane use.

General Electric is to do the conversion work via a $19 million subcontract with Vitol.

Expected to annually consume some 250,000 tons of propane, LP gas power generation is scheduled to be fully online by October 2014.

While residents have voiced some concerns over propane’s safety, the switchover from crude and fuel oil is also being praised for its ability to deliver a cleaner and cheaper generating process.

Leading off her story with the words “All hail propane,” reporter Amanda Norris of the Virgin Islands Daily News noted that WAPA anticipates saving $90 million per year, and customers should see their electric bills drop from the current rate of about 50 cents per kilowatt hour to 36 cents per kilowatt hour.

Jason Budsan, president of the Environmental Association of St. Thomas, said the agreement represented a switch from “the dirtiest to the cleanest of the fossil fuels.”

Another advantage cited by Norris’ reporting is that the conversions being done to the territory’s turbines will also allow for the use of liquefied natural gas with only minor adjustments to the equipment.

Budsan and Paul Chakroff, president of the Environmental Association of St. Croix, additionally spoke of the agreement as a “bridge” while WAPA works toward the governor’s stated goals of introducing an even greater number of renewable energy sources into the grid by 2025. Wind, solar and biomass production could reduce the Virgin Islands’ use of fossil fuels by 60 percent.

Joseph Aubain, executive director of the St. Thomas-St. John Chamber of Commerce, said the reduced costs will motivate businesses to “invest more in future development” because “they will not face the severe overhead associated with present electric rates.”

A 2010 feasibility study “led WAPA to examine propane, as opposed to liquefied natural gas, as the most immediately realizable option for reducing the burden to ratepayers,” according to Norris, who said Vitol’s bid bested at least four other vendors during the process of awarding the contract.